Away from the cameras covering the Enron trial and largely hidden from view on the evening news, a war is being waged over the most basic rights of ownership that undergird our economy.

Most economic conflicts arise between those who own property and those who do not. Management versus labor. Landlords versus tenants. Rich versus poor. But now, the persecution is being directed at owners from those who manage what is owned. It is corporate executives versus stockholders.

Today, trillions of shares of stock are owned by pension funds and 401(k) plans -- that is, owned by millions of workers. Politicians say we need to move toward an "ownership society" -- but, we, the citizens, already own a pretty big share of Corporate America. For years, much of that ownership was passive -- many investors made gains, and didn't ask questions. But since Enron and other corporate scandals damaged the economy, many citizen investors, primarily through their pension and union funds, have tried to exercise their rights to demand reforms at the companies they own -- reforms that would increase companies' bottom line by cracking down on executive abuses.

For instance, the Coca-Cola Company recently agreed to obtain stockholder permission before approving large executive severance packages. Since 2000, three departing Coke executives were given $180 million in severance pay. Though opposed to the new policy, management was forced to accept it, thanks to a shareholder resolution by the International Brotherhood of Teamsters. The union owns shares of the company, and thus has a fiduciary responsibility to help make the company as efficient and profitable as possible. Reining in exorbitant executive pay packages that are draining resources is one way to do that.

Similarly, New York City's public pension funds are demanding that six major firms -- Wal-Mart, Chevron, Southern Company, Union Pacific, AmSouth Bancorporation and Cinergy -- start disclosing political contributions made with company cash. The pension funds own $1 billion of these companies' stock, and the demands follow agreements by other corporations to disclose political expenditures.

This is democratic capitalism at its finest. Company owners are watching their investments, using ownership stakes to vote for policies forcing companies to be more efficient. But these policies threaten the seven-figure salaries executives are used to, as well as the other trappings of life atop the corporate pyramid. These executives aren't taking shareholder democracy -- or their owners' demands -- lying down.

In December, the Financial Times reported that major companies are now "hiring shareholder surveillance companies to find out who their shareholders are and which might be likely to cause trouble." As if out of a cloak-and-dagger film, the Financial Times quoted Tim Vaeth, an analyst, as saying, "Companies want to know who owns their stock, what their investors' intentions are and what their voting history is." His firm, Shareholder Intelligence, issued a report fretting that shareholders have "taken critical steps toward increasing their influence in the boardroom."

Following up last month, the Financial Times reported that "Merrill Lynch is poised to become the first investment bank to dedicate a team to advise companies on the growing threat of activist investors." Meanwhile, in an interview with Business Week this month, the U.S. Chamber of Commerce angrily denounced shareholders "who want to have some degree of leverage over companies."

The language is telling. Shareholders -- the actual owners of companies -- are now seen by executives as "threats" who dare to desire "leverage over companies" they own. That is seen as "causing trouble," and thus requiring "surveillance" by company management -- or worse, from America's corrupt government.

Yes, federal and state officials have forcefully backed executives' war on owners. For example, in Congress, Republican and Democratic lawmakers joined hands in 1996 to override President Bill Clinton's veto of the Private Securities and Litigation Reform Act -- a bill limiting shareholders' ability to file lawsuits against executives who are abusing power. As one market analyst noted, the bill "paved the way for corporate chieftains basically to lie without fear of being sued." Last year, a U.S. Senate highway funding bill included language forcing corporate executives to personally certify the accuracy of their companies' tax statements. The provisions were aimed at deterring financial shell games that might put companies in legal jeopardy. But when the final legislation was negotiated behind closed doors, the measures were deleted.

The executive branch is no different. The Securities and Exchange Commission -- the agency whose purpose is to protect shareholders -- got an injection of anti-owner ideology in 2005 when its reformist chairman William Donaldson was forced out. In his place, President Bush appointed Chris Cox, a corporate-lawyer-turned-California-congressman, who authored the Private Securities and Litigation Reform Act. Now, the U.S. Supreme Court is joining in. Last year, justices issued a unanimous ruling making it more difficult for shareholders to win damages when executives deceive them about company finances. Last week, justices interpreted a 1998 law as barring shareholders from bringing class-action suits against company management when management commits stock fraud.

Politicians, of course, claim they want an "ownership society" -- while aggressively helping corporate executives undermine the rights and privileges that make ownership so attractive. They are, in short, helping disenfranchise owners from their property, meaning an even greater chance that citizen investors will be bilked in the future.

David Sirota is the author of the upcoming "Hostile Takeover" (Crown Publishers, May 2006). 

© 2006 San Francisco Chronicle

###